Author Question: Babcock Inc. is considering a project that has the following cash flow and WACC data. What is the ... (Read 59 times)

jordangardner · **on:** Aug 7, 2023

Question 1

Aubey Inc. is considering two projects that have the following cash flows:

	Project 1	Project 2
Year	Cash Flow	Cash Flow
0	–$2,300	–$2,100
1	600	1,300
2	800	1,200
3	1,100	900
4	1,200	700
5	1,400	600

At what cost of capital would the two projects have the same NPV?

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2.73%

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3.85%

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4.51%

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5.50%

Question 2

Babcock Inc. is considering a project that has the following cash flow and WACC data. What is the project’s NPV?

WACC:	11%
Year:	0	1	2	3
Cash flows:	–$950	$600	$400	$200

◦

$31.43

◦

$37.49

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$40.52

◦

$43.54

dianagarcia · **Reply #1 on:** Aug 7, 2023

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